Gary Hamel Sees “More Options… Fewer Grand Visions”

Gary Hamel, ranked across the board as one of the world’s most influential business thinkers, is out to shape the future of management. While companies have been innovating at a ferocious pace in areas of product development and technology, their management practices can often lag behind. Here, Hamel speaks of new models for the future — and who is implementing them right now.

So what will the future of management look like?

There are several core principles around which we are going to have to build our new management models. One of the principles is freedom. You can’t have a highly adaptable institution that is overly controlled from the top.

A second critical principle is variety. As the world becomes more uncertain, it’s harder to see farther ahead. You can’t make 10- or 20-year strategies. What becomes more important is trying lots of new things — experimenting in low-cost ways continuously — and seeing what works and what doesn’t. So more options, more experimentation, fewer grand visions, fewer strategies would be the second principle.

The third principle is that we are going to have to apply the logic of markets inside our organizations more and more. Markets are not infallible, but they are much more effective at allocating resources toward new ideas than hierarchies. In a market, if you decide you want to sell your shares in company X and invest in company Y, you don’t have to ask anyone else — you just do it. So over longer periods of time, markets on aggregate tend to outperform any company individually. In markets, power is widely distributed — a lot of people are making choices every day about what to buy and where to invest. In hierarchies we tend to give a relatively small minority of people a monopoly on setting strategy and direction and that can be fatal in a highly discontinuous world.

Can you highlight companies that are applying these new management principles, helping them to get ahead of the game?

I think it’s very dangerous to pick out any particular company. I don’t think there’s any company that I’d say: “Yeah, these guys have sorted this out.” There are, however, organizations that are more aware of the challenges than others, and are maybe thinking a little bit more explicitly about them.

I think Google is one of these companies. They are thinking about the problem of how you build an evolutionary advantage — a company that never falls in love with the status quo, and where the old guard never wins internally at the expense of the vanguard.

There are a lot of companies that are experimenting at the fringes with new management models. Bank of New Zealand has 189 branches and is conducting an interesting experiment with employee freedom. They have given every branch manager the right to set their own opening hours. It doesn’t sound like a big deal, except I don’t think any bank has ever done that. They wanted to make sure that every one of those branch owners felt like a business owner, and to do that, you have to give them that kind of freedom.

This year is the centennial celebration of Peter Drucker’s birth. Do you feel his management theory has withstood the test of time?

I think, generally, it stands up very well. Clearly Peter Drucker is one of the most prescient writers about management and managers that has ever lived. There are two things in particular I think he understood early and he understood well. One was the transition from the industrial economy to the knowledge economy. Number two was that he realized earlier than most that we are now living in a world where less and less is certain and where the future was going to be less and less an extrapolation of the past. I think he could see how that was going to stretch organizations in new ways. When he looked outwards, I think he had really great over-the-horizon radar.

Where are we heading now?

We went from an industrial world where wealth came from your ability to accumulate and deploy capital, to a knowledge world where it came from an ability to grow and deploy skills and competencies. I think we are now moving to a creative economy where even knowledge itself is becoming a commodity. Knowledge advantages dissipate very quickly, so everyone is in a kind of perpetual race to invent the next thing, to create some new form of value. As competitive advantages become much more fleeting, what you can accumulate in the way of knowledge and resources matters less and less. Instead the most important differentiator will be how fast you can create something new.

What shifts will we see as a result of a “creative economy”?

One of today’s most interesting challenges is that, in an open world, creative ideas can come from anybody. Today, if I need a new ad campaign, I can broadcast that around the world and find creative ideas from anywhere, and often pay very little for that idea versus what I would pay for some high-priced talent in a large agency in New York, London or Paris. The same economic pressures that we have seen first in blue-collar work, and then in white-collar analytical work, we are now going to see with what I call “no-collar” work — the guys who just wear t-shirts to work.

How will management success be defined in the future?

To succeed in the future, organizations are going to have to find ways of energizing people, so that they not only bring their skills, expertise and diligence to work, but they bring their passion and their initiative as well. So you think: What are people passionate about? What drives this deeper commitment? And the answer is some kind of a cause — some kind of a purpose that’s bigger than you and which is bigger than just making money.

Biography

The Wall Street Journal recently ranked Gary Hamel as the world's most influential business thinker, and Fortune magazine has called him "the world's leading expert on business strategy." For the last three years, Hamel has also topped Executive Excellence magazine's annual ranking of the most sought after management speakers.

Gary Hamel is Author of one of the top bestselling books ever on business strategy, Competing for the Future, Hamel is one of the most respected authorities on business and management in the world. Gary Hamel has been called “the leading strategy expert in business today” by Fortune magazine and “the world’s reigning strategy guru” by The Economist. His ground-breaking concepts have transformed business strategies and management practices around the world. Hamel’s landmark books, Competing for the Future—written with C.K. Prahalad and Business Week’s Book of the Year—and Leading the Revolution, have been translated into more than 25 languages and are global bestsellers. Hamel has also written several articles for Harvard Business Review, Fortune, The Wall Street Journal, The Financial Times, Fast Company, Business 2.0, CIO magazine, and other professional and academic journals. Hamel is the founder of Strategos, an international consulting company. As a consultant he has worked with General Electric, Nokia, Shell, Proctor & Gamble, and IBM, among many others. He is also a visiting professor of strategic and international management at the London Business School.